Apr 02 , 2015

Is Amazon Taking Over The Home Service Industry?

Screen Shot of Amazon Local Services

As if Amazon didn’t have enough products to sell already, they are now in the business of selling services. That’s right, you can now hire a handyman, or offer your handyman services through Amazon Home Services.

What does this mean for handymen and other service providers?  Should you partner up with the internet giant to grow your business?

In this article, I’m going to explain what Amazon Home Services is and what it means to you –  the service provider.

What is it?

Amazon Home Services is a way for Amazon to provide more value to their existing customers by recommending vetted service providers to them.  They’ll have a list of all kinds of service providers, from handymen, plumbers, and electricians, to dog groomers and goat herders.

How does it work?

The customer has the opportunity to purchase pre-packaged services directly from Amazon.  They can do this by searching for services directly or by being up-sold when they purchase the appropriate products.

Let’s say somebody purchases a TV wall mount bracket, they would then be presented with the opportunity to purchase installation as well.

The service providers are then connected to the customer and schedule the jobs through Amazon’s web interface.  Basically, just like any other lead generation service, the contractor gets a new customer, and Amazon gets a cut of the job.

You don’t pay for leads, you just pay a percentage of each job.

Benefits to the Customer

Customers are always struggling to find good service providers they can trust.  Amazon is eliminating the time and effort by pre-vetting the services which provides convenience to the customer.  Each business will be required to go through a background check, be licensed if required, and have a “good track record” (whatever that means).

Additionally, customers can see the price of the job right there, just like buying any other product on Amazon.  This is huge.  Customers no longer have to call tradesmen and get quotes on their services.   Now they can check prices with just a couple of clicks.

Benefits to the Handyman

  1. You can piggy-back on Amazon’s Trust – As a handyman, you have the opportunity to partner with Amazon, which is a highly trusted company.  This is not only great for getting exposure, but for positioning your business.
  2. Huge potential for generating leads – According to Amazon, 1 in 8 Internet users have been on their website in the last 30 days!  That’s a tremendous amount of traffic which means a ton of potential exposure for you.
  3. Control over pricing – You get to set your own pricing.  I would expect this, but it’s still nice.
  4. Amazon handles the payment processing, freeing you up to just do your job and not worry about talking money.
  5. Target specific areas – You can choose highly targeted zip codes instead of having to service your entire city.

Limitations and Negative Consequences

At first blush, everything looks great because there are some clear benefits to all parties involved.  Customers get the added convenience of easily price shopping for trusted services, service businesses get exposure to customers, and Amazon makes more money.

But, I can’t help but wonder what this will do to the price of handyman services who advertise on Amazon.  Is it going to force handymen to compete on price even more?  I mean, Amazon is certainly a place that is known to attract price shoppers.  As multiple vendors try and compete for the top spot on Amazon, price wars are inevitable, and lower prices always lead to lower quality.

Another potential issue I can see is with the variability of jobs.  With this package price model, you will be forced to provide a price before even knowing what the job looks like.  Or, even worse, you don’t have the opportunity to screen your customers before doing business with them.  Personally, in my own handyman business, I enjoy the freedom of having control over how I handle individual jobs.

What if a customer purchases a $200 wall mount installation and the job ends up being a $1200 wall mount installation?  That’s going to be bad news to the customer when the installer shows up.  I’m interested to see how Amazon is going to mitigate these inevitable issues.

Conclusion

It’s pretty obvious why Amazon would roll out such a program.  They now get to capitalize on the huge market of lead generation and provide a (potentially) better service to their customers.

But, will it change the way us handymen find work?  For some, absolutely.  Those who fail to master their own marketing will have no choice but to rely on these forms of lead generation.  For others, it will simply be another tool in the marketing toolbox that they can utilize when and if it makes sense.

What do you think?

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